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U.S. Net-Lease Market Trends Report | April 2018

Rising demand for U.S. net-lease real estate led to $57.8 billion in investment volume last year—the second-highest annual total since CBRE began tracking the market in 2002. Investment volume in 2018 is expected to be comparable, with increasing investor appetite for net-lease office and industrial assets.

Overall net-lease cap rates softened slightly last year, though certain asset classes saw continued compression. Spreads remained essentially unchanged from 2016 and were in line with long-term averages at about 400 basis points (bps). This buffer should be sufficient to maintain attractive margins in 2018, as net-lease cap rates are expected to stabilize.

The global search for yield and a push for portfolio diversification are driving foreign investors to the U.S. net-lease market. Over the past four years, foreign investors increased their holdings of net-lease properties more than any other investor group. Canada, South Korea and China have been the top buyers.